Prices Sluggish For Western New-Crop Alfalfa

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While hay growers in most parts of the country are gearing up for the 2013 hay harvest, their counterparts in the West and Southwest have already had a taste of the new-crop market. Although most Western growers report prices from $10/ton to $50/ton lower than they were early in the season last year, all anticipate prices of $200/ton or higher.

Arizona. Prices for dairy-quality hay have started out “a little soft” this season, reports David Sharp, of Lyreedale Farms near Roll. He and his brother, Clyde, put up alfalfa hay on 1,500 irrigated acres.

Currently, growers in the Sharps’ area are asking around $200/ton, about $30/ton lower than the price was a year ago. “With the dairy industry’s challenges, dairy buyers are trying to hold their bottom line and are offering a little bit less than our target price,” says Sharp.

Typically, the Sharps take 10-11 cuttings per year. Their spring and fall harvests are usually earmarked for dairies, primarily in Arizona. Summer hay is marketed to local beef feed feedlots. As of last week, they were finishing up third crop.

“We had some cold weather, by our standards, this winter, and the crop was a little slower coming back in the spring. Overall, though, production has been pretty much normal.”

Hay export trends will determine where prices head in the next several months. “If the (overseas) market stays strong, we should hold a fair summer price,” says Sharp. “Obviously, if it drops off, it will have a negative impact on our prices this year. ”

California. As alfalfa growers in the state’s Central Valley started on second-crop harvest last week, prices continued to lag year-ago levels.

Currently, most supreme-quality, new-crop hay is fetching around $250/ton for growers. “That’s about $20/ton cheaper from where we started off last year,” says Norman Beach, vice-president of San Joaquin Valley Hay Growers Association.

Lower-than-expected production could push the market upward soon, though, he says. “Our first-cutting tonnage was short, and the second crop is starting out that way. Hay has been moving fast. You can feel this market starting to turn a bit.”

Developments in the dairy sector will play a big role in determining where prices head from here. “It’s been steady for the most part. If the milk price does go up, we could see this hay price escalate.”

Another potential positive for growers: Export buyers have been active in the area this spring. “Usually, the exporters are only interested in summer hay. This year, we’ve seen them jumping in on first cutting even more than they did last year.”

New Mexico. Even though a long-term drought threatens to crimp this year’s alfalfa-hay production, prices for new crop have backed off from year-ago levels in the south-central part of the state.

Currently, dairies there pay $230-240/ton for premium alfalfa. A year ago, the price was closer to $280/ton. “Dairies set the price for hay throughout the area, and right now the dairies don’t have any money,” says Christy Forbush, office manager for Deerman Hay Services in La Mesa.

Deerman harvests 33 acres of its own alfalfa and custom cuts and bales for area farmers. It also buys and resells hay in three-tie bales weighing 100 lbs and 3 x 4 x 8’ bales weighing 1,150-1,200 lbs each. Feed stores and individual horse owners make up its primary market. During a typical year, the company will have up to 3,000 tons of product on hand.

First-crop harvest started in late April. Although the crop came through the winter in good shape, lack of moisture remains a concern for growers, Forbush reports.

“We’re in our third year of drought, and people won’t be able to get water out of the Rio Grande for irrigating this year. So they’ll have to pump groundwater if they have it. That’s going to cut back some on production throughout the area.”

Nevada. Growers in the western part of the state can expect new-crop prices to be $230-240/ton, down slightly from where they were last year at this time – $240-245/ton, says Jon Hill. He’s sales manager for Nevada Hay Growers, Inc., a 95-member cooperative based in Yerington. First-crop cutting was just underway in the western part of the state last week.

Prices are likely to strengthen as the season moves along, he believes. A key factor: Irrigation water is likely to be in short supply due to a sub-par mountain snowpack this winter. For the two reservoirs serving the area, water levels are currently only 23% of normal in one and 9% in the other.

“It’s shaping up to be a real major-leaguer,” says Hill. “Anyone who relies on one of those reservoirs to irrigate is going to feel some hurt.”

Typically, alfalfa growers in the region take four cuttings of hay annually. This year, some growers may only get one. “For the co-op, we’ll usually have an inventory of around 100,000 tons each year. This year, we’re estimating our production could be as low as 80,000 tons, a 20% drop.

“Things will start out a little slow,” he adds, “but then everybody will figure out there’s a major shortage of hay. When that happens, we’ll see prices pick up a little bit.”

Washington. Alfalfa growers in the Southern Columbia Basin were well into first cutting last week. Prices appear to be off “just a smidge” from those of a year ago, says Greg Sanders, market reporter for USDA’s Market News in Moses Lake.

Along with dairies, export firms are the big players in the Washington market. In his May 10 report, Sanders noted that a sale of 300 tons of alfalfa to an export buyer brought $205/ton.

A major concern for state growers this year is the falling Japanese yen. “A lot of the hay out of this area goes to Japan,” says Sanders. “If there’s less demand from buyers there, it’s going to mean lower prices here.”

Even so, the mood among growers appears to be upbeat. “Anytime the trade is above $200/ton, growers are going to be pretty optimistic.”